1:00PM NY, 5:00 PM Frankfurt European markets closed lower, led by banks and exporter stocks.

European stock markets finished in the negative for a second day in a row. Banks and exporter-related stocks were leading decliners amid concern that U.S. mortgage losses will hurt economic growth and slow global expansion. Germany led losers with a drop of 0.8%, followed by France, down 0.3% and the U.K., down 0.2%.

In Frankfurt engineering company Siemens slipped 1.5%. In the automotive sector, DaimlerChrysler dropped 1.6%, while Bayerische Motoren Werke AG, the world''s largest maker of luxury cars, fell 1.3%. Among financial stocks, insurance company Allianz dropped 1.4%.

In Paris Accor SA, Europe''s biggest hotelier, jmped 5.3% on speculation that Kohlberg Kravis Roberts & Co. may launch a bid for the company.

In London Barclays was a notable decliner, falling 1.1%. Royal Dutch Shell lost 1.2% after Goldman Sachs cut its rating for Europe''s largest oil company to sell. On the positive side, Unilever rose 2.7% on speculation that U.S. Colgate-Palmolive Co. may be interested in buying the maker of food and detergent. Whitbread Plc jumped 7%, while British Sky Broadcasting Group Plc rallied 4.2% after the U.K.''s biggest pay-TV company added more new customers in Q4 than expected for the whole year.


11:30AM U.S. market averages regained some ground. Transportation and steel sectors advanced.

U.S. stock markets recovered from steep declines on the back of some takeover deals and speculation. The steel sector posted significant strength, as Chaparral Steel (CHAP) climbed 10.3% after the company agreed to be acquired by Gerdau Ameristeel (GNA) for $4.22 billion. Gerdau fell 9%. Further in M&A action, Unilever rose 4% on speculations that Colgate-Palmolive was interested in buying the company

Transportation stocks also posted some strength, benefiting from a decline by the price of oil. Among the most notable gainers, Burlington Northern (BNI) rose 2.7%, Con-Way (CNW) advanced 2.4%, and CSX (CSX) gained 2.5%. Crude oil futures fell 16 cents to $72.65 a barrel after a weekly petroleum report showed that U.S. commercial crude oil inventories declined by 1.4 million barrels compared to the previous week, while gasoline inventories rose more than anticipated.

Some health insurance and chemical stocks also posted strong gains.
Among individual stocks, Yum Brands (YUM) rose 4% ahead of its Q2 earnings report and on the back of an upgrade to buy from UBS. In late morning trading, the Dow Jones rose 46.90, or 0.35%, to 13,548.60, after dropping 148 points on Tuesday. The Standard & Poor''s 500 index gained 5.78, or 0.38%, to 1,515.90, and the Nasdaq advanced 4.75, or 0.18%, to 2,643.91. The yield on the benchmark 10-year Treasury note rose to 5.07% from 5.03% late Tuesday.


9:45AM Wall Street opened modestly higher, despite subprime lending concerns.

U.S. stock markets recovered from steep declines on the back of some takeover deals and speculation. The steel sector posted significant strength, as Chaparral Steel (CHAP) climbed 10.3% after the company agreed to be acquired by Gerdau Ameristeel (GNA) for $4.22 billion. Gerdau fell 9%. Further in M&A action, Unilever rose 4% on speculations that Colgate-Palmolive was interested in buying the company

Transportation stocks also posted some strength, benefiting from a decline by the price of oil. Among the most notable gainers, Burlington Northern (BNI) rose 2.7%, Con-Way (CNW) advanced 2.4%, and CSX (CSX) gained 2.5%. Crude oil futures fell 16 cents to $72.65 a barrel after a weekly petroleum report showed that U.S. commercial crude oil inventories declined by 1.4 million barrels compared to the previous week, while gasoline inventories rose more than anticipated.

Some health insurance and chemical stocks also posted strong gains. Among individual stocks, Yum Brands (YUM) rose 4% ahead of its Q2 earnings report and on the back of an upgrade to buy from UBS. In late morning trading, the Dow Jones rose 46.90, or 0.35%, to 13,548.60, after dropping 148 points on Tuesday. The Standard & Poor''s 500 index gained 5.78, or 0.38%, to 1,515.90, and the Nasdaq advanced 4.75, or 0.18%, to 2,643.91. The yield on the benchmark 10-year Treasury note rose to 5.07% from 5.03% late Tuesday.


9:30AM London equities fall sharply with banks, properties and oil stocks leading the decline.

In London, concern about U.S. housing market and subprime mortgage rates hurt sentiment. Two of the biggest banks, HSBC, the biggest bank in terms of market capitalization and HBOS, the biggest lender in the U.K. fell sharply as investors fear that the slowing U.S. housing demand may erode economic growth. Oil companies Royal Dutch Shell and BP also dipped on downgrades by Goldman, Sachs & Co and on weaker oil prices.

Economic news

Prime Minister Gordon Brown announced today that the government is considering introducing covered bonds to boost mortgage lenders to offer more 25-year fixed-rate loans, which is part of the premier’s legislative program for the next year.